AXIS Capital Holdings’ lower-than-expected 2020 first-quarter earnings has now led to a negative ratings outlook from Standard & Poor’s.

The S&P action, which downgraded from a stable outlook, follows A.M. Best’s move a week ago to issue an outright ratings downgrade over the same matter.

S&P Global Ratings affirmed it’s “A+” ratings for the Bermuda-based specialty insurer and reinsurer at the same time. It said the company’s $185 million net loss in Q1 (mostly due to COVID-19 pandemic losses) was a big factor in its outlook downgrade.

“The outlook revision follows AXIS’ underperformance in first-quarter 2020, with a combined ratio of 120.5, which will further delay the underwriting, operating expenses and fixed-charge coverage improvements that we incorporated in our forecast to support the rating,” S&P wrote in its explanation of the change.

S&P said that AXIS’ COVID-19 pretax losses of $235 million “are manageable” and not the sole driver for its outlook revision. The bigger issue, S&P said, is the company’s underperformance compared to its peers. Operating expenses are another point of concern, the ratings agency noted, even as the company has addressed capitalization issues and its appetite for property/casualty through reinsurance and the use of alternative capital.

One point where S&P gives AXIS credit: actions it has taken to boost its underwriting performance. But COVID-19 will likely defer improvements, so S&P issued its outlook revision even as it expects AXIS to strengthen its earnings with previous improvement actions.

A.M. Best downgraded the financial strength rating to “A” (Excellent) from “A+” (Superior) for AXIS and its subsidiaries based on concerns about AXIS’ financial performance compared to its peers.

AXIS Capital’s stock traded at $35.11 late afternoon on May 13, down close to 5 percent and drastically lower than a high of $65.80 on Feb. 5, 2020, just as the coronavirus pandemic was starting to take hold.

Source: S&P Global Ratings